Changes to the system which funds new social housing development are underway to help landlords cope with an anticipated fall in rents.
The government has begun "factoring-in" to the headline grant rate its plan to link rents to inflation only - even though the proposal is technically still out to consultation.

The grant rate is used by housing associations to bid for the Housing Corporation's approved development programme, which will be increased to £1.2 billion by 2003.

Next year's will take acccount of the commitment to capping rent rises to the retail price index, despite reservations at the corporation over the policy, as part of a raft of alterations aimed at overhauling the investment process.

In its response to the housing Green Paper, the corporation warns "an RPI only regime could be very demanding for the sector with consequences for the long-term management and maintenance of housing stock."

The quango also questions the plan to link social rents to capital values and suggests officials explore alternatives like council tax banding.

Chairman Baroness Dean said: "We are aware of the concerns of the sector. We recognise [associations] face additional financial pressures as a result of proposed rent restructuring and the demand for higher quality services."

She declined to comment further until the government publishes the results of its survey of how the reforms would affect 60 associations.

The agency revealed that at least half of the 2001/02 ADP fund will be allocated on the basis of "strategic priorities" as opposed to the traditional housing needs index.

It plans to "develop greater expertise in understanding local and regional housing markets" and low demand in particular as part of the reformed process.

There will also be a revamp of the social housing grant system to encourage more low cost home ownership, market renting and homes for private sale in developments bigger than 25 units.

Source

Housing Today